Photo: HGTV's FrontDoor News

Mistake #7: Buying a foreclosure or fixer-upper without doing your research

Some homebuyers are so set on finding a bargain, they overlook the fact that buying a home that needs repairs can be a stressful and expensive project. Before buying a fixer-upper, get estimates on any necessary repairs and renovations and make sure they will pay for themselves in increased property value.

The foreclosure market is also full of opportunities, but it’s important to be aware of the potential pitfalls before buying a foreclosed property.  Be certain to check tax records, deeds and Homeowner Associations (if applicable) for delinquent property taxes, encumbrances or overdue HOA fees.

Photo: HGTV's FrontDoor

Mistake #8: Not researching the neighborhood

What good is having your dream home, if you don’t like the community where it’s located? Before shopping for a home, shop for a neighborhood. Make sure it’s a good fit for your lifestyle — figure out how long you want your work commute to be, how close you want to be to amenities like shopping and nightlife, and which school districts are the best. Even if you don’t have children, living near good schools raises your property value. Visit the neighborhood several times and at different times of the day. The biggest incentive for finding a quality community: a great neighborhood will increase your home’s value, while a bad one will drag it down.

The house you plan to buy should be a place that feels like home to your family and it’s important to remember that it’s also a huge investment. When looking  for that perfect home, you should also think about reselling your home down sometime in the future.  Chances are good you will move again due to a new job, retirement, moving closer to family, etc. so you want to increase your chances of a quicker sale.

Look for homes in desirable locations and consider buying a smaller home in a more expensive, sought-after neighborhood.  Be certain to look for features that future buyers will want, such as energy-efficient upgrades, upgraded communication capabilities (“smart” house or CAT 5 wiring,etc), drought tolerant landscaping and extra storage space.  If you are a DIYer look for a home with good structural details and site location and plan to do the cosmetic upgrades yourself, but be certain to include those remodeling estimates in your mind when determining what you can afford.

Remember the adage “don’t buy the largest/most expensive home on the block”.  Owning the “baby” on the block provides more opportunity for upgrades and appreciation.

Reblogged from The S.E.E.D. Home:

This is a pictoral journal of construction of The S.E.E.D. Home® from site prep to present.  The interior framing is in process and we’ll be adding more as we have the time.  We’ve come a long way.

This is by far one of the best SIP’s journal I have viewed! I am fascinated by the radiant floor heating and cooling.

Not only is La Mirada Homes in Tucson, AZ building almost net-zero homes, but Michael Ginsburg and the S.E.E.D Home will be receiving the EVHA award (Energy Value Home Award)  from the National Association of Home Builders Research Council  (NAHBRC) week in Orlando, FL at the International Builder Show.

Photo: Ris Media

Remodeling sentiment rose to the highest level in five years, according to the National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) for the fourth quarter of 2011. Released yesterday, the RMI increased to 46.6 in the fourth quarter from 41.7 in the third quarter.

In the fourth quarter, the RMI component measuring current market conditions rose to 48.4 from 43.0 in the previous quarter. The RMI component measuring future indicators of remodeling business was also positive, increasing to 44.8 from 40.4 in the previous quarter.

An RMI below 50 indicates that more remodelers report market activity is lower (compared to the prior quarter) than report it is higher. The overall RMI averages ratings of current remodeling activity with indicators of future activity.

“As more consumers remain in their homes rather than move in this economy, remodelers benefited from a gradual increase in home improvement activity, taking us to a five-year high,” said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. “2011 ended on a strong note for the remodeling industry.”

Current market conditions improved significantly in all four regions over the third quarter of 2011. The RMI reported higher market activity in two important categories: major additions 52.3 (from 45.2) and minor additions 50.1 (from 45.7).

Future market indicators in each region also experienced gains from the previous quarter. Two of the indices reported a level over 50: calls for bids at 50.7 (from 45.4) and appointments for proposals at 50.1 (from 43.3), while work committed for the next three months only rose to 31.5 (from 29.9).

“With several key components above 50, the latest RMI provides reason for guarded optimism going forward,” said NAHB Chief Economist David Crowe. “The residential remodeling market has been improving gradually, mirroring the trend in other segments of the housing market. Stringent lending requirements and economic uncertainty continue to be a drag on demand, but we expect a modest growth in remodeling activity to continue throughout 2012.”

Pre-approval lets you know how much house you can afford

Mistake #10: Not getting pre-approved before house hunting

Why get your hopes up looking at $500,000 homes, when you can really only afford a $300,000 home? Before you start house hunting, narrow down your price range by getting pre-approved. Shop for a lender or mortgage broker you can trust. The mortgage pro will review your credit, income, assets and debts, and recommend a mortgage with monthly payments that fit your budget. The result is a good faith estimate, a document that spells out the likely terms of your loan, including the interest rate and closing costs. Not only does this let you know how much house you can afford, it also lets sellers know that you’re serious about buying.

• Understand the difference between pre-qualification and pre-approval
• Find out more about the pre-approval process

From the National Association of Realtors®:

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, increased 7.3 percent to 100.1 in November from an upwardly revised 93.3 in October and is 5.9 percent above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4 percent monthly gain.

The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions. “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high. Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,” he said.

“November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added.

Pending home sales are not affected by the recently published rebenchmarking of existing-home sales because the index uses a different methodology based directly on contract signings, and is adjusted for seasonality.

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.The PHSI in the Northeast rose 8.1 percent to 77.1 in November but is 0.3 percent below November 2010. In the Midwest the index increased 3.3 percent to 91.6 in November and is 9.5 percent above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7 percent above November 2010. In the West the index surged 14.9 percent to 121.2 in November and is 2.9 percent higher than a year ago.

Image from Wikipedia

There are a few basic building blocks you need to grasp to get a solid understanding of Energy Efficiency as it relates to homes.  H.E.R.S. is one of the critical ones.  A HERS rating provides an unbiased measurement of how efficiently a home uses energy.  The HERS rating quantifies the energy performance of a home based on a set standard, and therefore provides an easy way to compare the energy efficiency of different homes.

The measurement or HERS Score is calculated by a certified HERS rater using an energy efficiency software package to perform an energy analysis of the home’s design.   To be certified, a HERS rater must successfully complete RESNET (Residential Energy Services Network) training and abide by RESNET requirements, they do not report to any builder or energy certification program.

A HERS rating of 100 would be the rating for a home built to the current code, but not exceeding code.  A HERS rating of 250 would use 2.5 times as much energy as one with a rating of 100.  A HERS rating of 50 would use only 50% of the energy of one with a rating of 100.

As more people request this information from Builders and Sellers, the HERS rating will become more important in a home sale.  After homeowners discovered a mortgage payment may be affordable, but high utility bills can take the same home and put it beyond their means.

If a HERS rating or Green Building/Retrofit certification is not available for a home you are interested in purchasing make certain you ask for copies of the utility bills before making your offer.  This will give you a good estimate what the home will cost you every month.

These rules — that go into effect June 2012 — fall short. While they bar the industry from continuing to use misleading claims like “waterproof,” “sweatproof” and “sunblock,” they still allow potentially dangerous ingredients like retinyl palmitate and oxybenzone. In another example of almost-but-not-quite-right, the FDA’s new standard for UVA protection is so weak that it will allow nearly every product on the market today to claim both UVA and UVB protection, indicated by the term “broad spectrum” despite the fact that some products do not offer adequate protection.

What this means is…you will still need to read the ingredients on sunscreen products or check your product on an online sunscreen guide like EWG’s sunscreen guide, which is updated every year.   This is a great first step!

Credit: Environmental Working Group